Businesses Say Coke Stole Trade Secrets

LOS ANGELES (CN) – Coca-Cola booted 68 distributors from their contracts with Monster Energy Drinks after it paid $2.15 million for 17 percent of the company, the ousted distributors claim in court. A&B Beverage Company et al. sued Coca-Cola Tuesday in Federal Court, alleging interference with contract and misappropriation of trade secrets. The distributors, all members of the Anheuser-Busch network, entered separate 20-year contracts with Monster to be exclusive distributors of its products within specific territories, according to the 20-page complaint. Neither Monster Energy nor Anheuser-Busch are parties to the lawsuit. The distributors claim their investment of time and effort getting Monster’s products on shelves helped transform Monster from a “run-of-the-mill brand into a premier energy drink company valued at over $10 billion.” Coca-Cola has tried to break into the energy drink market without much success. When it saw how lucrative the distributors’ deals with Monster were, it wanted in on the action, according to the complaint. In August 2014 it paid $2.15 billion to buy a 17 percent share in Monster. But instead of keeping the plaintiffs as distributors, Coca-Cola required Monster to terminate their contracts so it could take over their territories, the distributors say. The distributors say Coca-Cola ignored their cease-and-desist letter, then terminated their contracts in April and transferred their confidential information to its own distributors. Coca-Cola spokesman Scott Williamson declined to comment on the case. The distributors seek damages of “between 6 and 7 times each plaintiff’s annual gross profits generated from the Monster products,” plus costs and attorneys’ fees. They are represented by Barry Gold with Shaffer, Gold & Rubaum, who did not immediately respond Thursday to a request for comment.